The amount of your retirement benefits and the date on which they
become payable will depend on your age, final pensionable pay and
length of pensionable service. The following information relates to
those with at least two years’ qualifying service.
If you are a member of NPPS you will be able to retire from age 55
with an immediate pension. This applies to all
ranks.
If you leave the police service with at least two years’ qualifying
service before age 55, or if you opt-out of NPPS at any age, you
will be entitled to a deferred pension which will come into payment
from age 65. A deferred pension may be paid early in case of ill
health or if you opt for it to be reduced.
Retirement age
You can retire as soon as you reach the age of 55. You must retire
not later than ‘compulsory retirement age’ for your rank, unless the
chief constable (or police authority in the case of an officer above
the rank of superintendent) has approved an extension of service.
You must give a minimum of one month’s notice to the police
authority that you wish to retire (chief constables and other ACPO ranks must give a minimum of three months’ notice). A pension
cannot be paid to you below the age of 55 unless it is an ill-health
pension.
From 1 October 2006, compulsory retirement ages are as follows:
- For a constable, sergeant, inspector or chief inspector, 60 years
- For an officer with any higher rank, 65 years
These ages apply to all forces: there are no longer separate compulsory retirement ages for the Metropolitan Police. Appointments to the chief constable and deputy chief constable are for a fixed term. If you have been appointed for a fixed term that ends before you reach the age of 55, and your service does end before you reach age 55, you will be entitled to a deferred pension payable at age 65.
If you have completed 35 years’ pensionable service in NPPS (or would have been able to if you had not opted out of NPPS) and you are at least 55 years old, your police authority may require you to retire on the grounds that your retention in the force would not be in the general interests of efficiency.
If you become permanently disabled at any age for the performance of the ordinary duties of a member of the force, your police authority may require you to retire on the grounds of ill-health.
Final pensionable pay
Your pension benefits are generally calculated on your pay shortly
before you retire. Final pensionable pay is the greatest of:
- Pensionable pay in the 12 months prior to retirement
- Pensionable pay in either of the two preceding years
- Pensionable pay averaged over any three consecutive years in the seven years before that.
Broadly, final pensionable pay is the highest pensionable pay up to 10 years before retirement, with pay in previous years being uprated for inflation.
Example 1
An officer transferred his service from the former Police Pension
Scheme to NPPS and retires at the end of 2008. He was given
temporary promotion in 2007. His pensionable pay in the three
years prior to his retirement has been:
2006 £37,000
2007 £45,000
2008 £40,000
His final pensionable pay will be his 2007 pay, uprated for inflation.
Final pensionable pay is always taken to be full-time pay. If you work half time for a year, for example, your final pensionable pay for that year is the full-time rate (but you will only be able to count a half year’s pensionable service).
If you have opted out of NPPS and rejoin less than three years before retiring, the final pensionable pay will be different for the two periods. It will be based on the final pensionable pay at the end of each period, with the pay at the point when you opted out being uprated for inflation. If you are in this position you are advised to contact LPPA who will be able to explain the effect on your pension.
Pensionable service
NPPS calculates benefits as a proportion of final pensionable pay depending on length of service. Service which counts for this purpose (‘pensionable service’) includes:
- Your current service as a regular police officer during which you have paid pension contributions or for which contributions are deemed to have been paid (e.g. any unpaid period in the first 26 weeks of maternity leave)
- Earlier service in the same force, or in other police forces if you transferred to your present force from another force (again, provided that you paid pension contributions in your earlier service and that these have not been refunded to you)
- Earlier service with a Scottish force or the Police Service of Northern Ireland, if you transferred with consent and you paid pension contributions which have not been refunded to you
- Periods of ‘relevant service’ under Section 97 of the Police Act 1996 (this includes appointments to the Inspectorate of Constabulary and certain types of overseas service) during which you have paid pension contributions. (Officers contemplating overseas service are recommended to seek advice on the pension position before agreeing to undertake it.)
If you have pension benefits in the scheme of a former employer or in a personal pension plan you may be able to transfer them into NPPS. The transfer value will buy a credit of pensionable service in NPPS. Your police authority has discretion in NPPS to refuse a transfer if it is deemed to be insufficient to cover the cost of any Guaranteed Minimum Pension to which you may be entitled (if you had been employed in the period 1978 – 1997).
Part-time working and pensionable service
Approved part-time working is counted as pensionable service on a pro rata basis based on actual hours worked as a proportion of fulltime work. Your pension contributions are also collected on a prorata basis (i.e. 9.5% of the part-time pay).
If you are a part-time constable or sergeant, any hours you work on top of your determined hours will be automatically pensionable.
Example 2
An officer’s full-time pensionable pay would be £30,000 but she is working half-time. She therefore receives £15,000 salary and pays pension contributions, at 9.5% of that, of £1,425. Each year that she serves half-time and pays pension contributions adds half a year to her pensionable service.
Benefits on retirement
You will receive a pension for life plus a tax-free lump sum.
Your NPPS pension is based on 1/70th of your final pensionable pay for each year of pensionable service up to a maximum of 35/70ths. For example, 25 years equals 25/70ths. Each day counts as 1/365th of a year. The maximum length of pensionable service that can count towards a NPPS pension is 35 years.
The lump sum is four times the annual pension.
You can exchange all or part of your lump sum for increased annual pension.
Ordinary pension
An ordinary pension is awarded on retirement after completion of at
least two years’ qualifying service.
‘Qualifying service’ is not the same as pensionable service. Qualifying service is normally the calendar length of police service, plus any previous service or employment which you have transferred into NPPS. For example, if you serve half time for a year in a police force, this will count as one year towards qualifying service (but could only count a maximum of half a year’s pensionable service).
Example 3
An officer’s final pensionable pay is £30,000 and his pensionable service is 21 years. His pension = (£30,000 x 21) / 70 = £9,000 per year (index linked after the first year) His lump sum = (£30,000 x 21 x 4) / 70 = £36,000 (tax free)
Pension after part-time work
As mentioned in section 4.4, approved part-time working counts as pensionable service on a pro-rata basis. However, your final pensionable pay is based on the full-time equivalent of what you earn.
Example 4
A part-time officer who has worked for 20 years, 10 years of which were full-time and 10 years half time: i.e. with 15 years’ pensionable service. She can retire with an immediate pension on reaching age 55. Her final pensionable pay is £35,000 and pensionable service is 15 years. Her pension = (£35,000 x 15) / 70 = £7,500 per year (index linked after the first year) Her lump sum = (£35,000 x 15 x 4) / 70 = £30,000 (tax free)
Deferred pension
You are entitled to a deferred pension if you are under 55 and have
at least two years to count towards qualifying service, and you either:
- Leave the police, or
- Cease to be a member of NPPS by opting out of it.
Without transferring your NPPS rights to another pension scheme. The deferred pension will be based on your pensionable service and your final pensionable pay at the date on which you left the police or leave the force or opt out of NPPS up to the date at which your benefits become payable (under Pensions Increase Act legislation).
If you leave the service or opt out of NPPS before age 55 then you can only be entitled to a deferred pension, regardless of how many years of pensionable service you have. Your deferred pension is payable from age 65.
Example 5
An officer leaves the police service with 10 years’ pensionable service and a final pensionable pay of £28,000. His pension entitlement when he leaves is (£28,000 x 10) / 70 = £4,000 per year, payable from age 65. By the time that he is 65, his deferred pension has increased by inflation factors under the Pensions Increase Acts by 10% to £4,400, and this is the amount that will actually be paid to him at age 65. Therefore his deferred lump sum paid at age 65 will be £4,400 x 4 = £17,600.
Early payment of deferred pension
If you have left the police service you can choose to have your deferred pension paid earlier than age 65, but it will be reduced for early payment. This is called ‘actuarial reduction’ and is to compensate for the fact that the pension will be paid earlier and for a longer period. LPPA can provide you with more information, but you should be aware that the reduction can be substantial (whilst this guide cannot be specific, it might be expected to be of the order of 5% for each year, so that a deferred pension taken at age 60 might be reduced by 25%) and that the reduction to your pension will be permanent (although survivor benefits will not be affected). The reduction affects both the annual pension and the lump sum, which will be four times the reduced annual pension.
Your deferred pension will be paid early without actuarial reduction if you have left the police service and you are permanently disabled for all regular employment. However, if you were dismissed, or required to resign under the Conduct Regulations, your deferred pension cannot be paid early unless the police authority exercises discretion to permit early payment.